Oracle is on the acquisition hunt again

Part of a $3.25 billion debt offering will be earmarked for "future acquisitions"

Ever-acquisitive Oracle apparently has no immediate plans to stop buying up companies, as indicated by a $3.25 billion debt issue it made this week.

Part of the proceeds will be used for "future acquisitions," according to a statement Oracle released late Monday. The question now is where and when Oracle will place its bets.

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Analysts pinpointed some likely moves from Oracle, chiefly a continued push into vertical offerings.

For one, Oracle could buy software to compete with vendors like Amdocs, which sells billing and order management systems to telecommunications companies and ISPs, Altimeter Group analyst Ray Wang said via email.

Oracle could also boost its health care application lineup with products aimed at areas like drug discovery or patient care, he added.

Cerner, maker of a variety of health care applications, could be one sizable potential purchase in that arena, according to 451 Group analyst China Martens. There has been buzz in recent years about that scenario, and Cerner also uses Oracle's database software.

With revenue of $1.67 billion in its fiscal 2009, and a current market capitalization of about $6.5 billion, Cerner would no doubt fetch a sizable sum.

Another big target is ERP (enterprise resource planning) vendor Lawson Software, which may be in play now that activist investor Carl Icahn has taken a stake in it. Some analysts expect Icahn to push for a sale of the company, which he has said is undervalued.

Lawson is one of the industry's largest remaining independent ERP vendors, with $757 million in revenue during 2009. Buying it would give Oracle an installed base of midmarket ERP customers as well as software aimed at the health care industry, Martens noted.

But another observer downplayed the possibility of Oracle acquiring Lawson.

For one, Oracle is busy trying to move forward its Fusion Applications strategy, next-generation software that uses the best attributes of its various acquired product lines, and it might be too much to absorb yet another big ERP vendor while doing so, said Frank Scavo, managing partner of the IT consulting firm Strativa. Fusion Applications, which have seen some delays, are expected to debut this year.

Another notch against an Oracle takeover is the fact that Lawson's software heavily relies on IBM technology, Scavo said.

Meanwhile, Oracle's recent purchase of Sun Microsystems has made it a player in hardware, meaning "bottom of the stack" purchases could also be on the table, Scavo said. In other words, anything from chips to storage to networking equipment could be on Oracle's shopping list now.

In addition, Oracle has been pushing a vision and strategy around fully integrated, metal-to-applications systems. That means it could look to buy a system integrator, said Forrester Research analyst John Rymer via email. "If Oracle is really going to compete with IBM, doesn't it need better in-house professional services?"

Scavo isn't so sure. "Services are a lower-margin business than what Oracle is used to achieving from their software," he said.

To that end, Oracle may invest in emerging software niches, such as green IT.

One Oracle partner, Environmental Support Solutions, was scooped up by IHS last year, but startups such as Hara Software present other opportunities, Martens said.

In addition, expect Oracle to pick up companies that extend core application areas like CRM (customer relationship management), she added. Examples include Buzzient, maker of social media analytics software, or business contact database provider NetProspex, she said.

An Oracle spokeswoman declined comment.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's email address is Chris_Kanaracus@idg.com

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